Some chief executives really earn their pay. Some don't. Some are so bad they should be paying the shareholders.

Investors should wish they had more executives like Robert K. Cole working for them. Since taking his New Century Financial, a real estate investment trust, public in 1997, he has delivered a 25% compound annual return to shareholders. For this he gets a paycheck that has averaged $1.6 million a year over the past six years. At the other end of the spectrum: Peter Cartwright of Calpine, a firm that develops and runs gas-fired power plants. This is not a profitable venture at the moment, and the average annual return to shareholders over the past six years has been -7%. For this unelectrifying performance Cartwright has pocketed an average annual $13 million.

Our annual scorecard of the best and worst chief executives starts with the 500 largest U.S. companies as measured by a composite of sales, profits, assets and market value. Among these are 189 companies whose bosses have been in place for at least six years. These bosses are scored for how well their performance stacks up against their pay. You can't compare performance to pay for a single year: Both numbers are far too volatile to yield a meaningful ratio.

In our analysis, "pay" consists of salary, bonus, exercised options and vested stock grants. This approach finesses the tricky business of evaluating stock options that may or may not ever vest, much less wind up in the money. The grading uses four factors. One is the company's stock performance (including dividends) relative to that of its industry peers over six years. Two others are annualized stock performance during the leader's tenure and performance relative to the S&P 500 during that time. The last factor is total compensation over the past six years. The ten best bosses on our scorecard are listed on page 116. Five newcomers to this year's list of poor performers appear on page 118. To see a full scorecard, go to forbes.com/ceos.

On page 114 we profile Jeffrey Joerres of Manpower, one of the best performers, and on page 118 Thomas A. Renyi of the Bank of New York, one of the worst.

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